China, EU face off at trade summit

AFP , BEIJING

China and Europe confronted each other over their long-running trade dispute in Beijing yesterday, with the EU calling for a level playing field and Chinese Premier Wen Jiabao (溫家寶) insisting on gradual reform.

"The EU exports less to China than to Switzerland, a country of 7 million people," European Commission President Jose Manuel Barroso told a business forum on the sidelines of an annual summit between the two sides.

"Our ultimate goal is to create a level playing field for both sides," he said.

EU Trade Commissioner Peter Mandelson spoke out at the same forum about China's trade surplus, which has put the focus on the yuan, with critics arguing it was being kept artificially weak.

"Our trading relationship with China started as we know in a balanced way," Mandelson said, with Wen in the audience.

"Now it is less balanced. Indeed in my time in China these last five days, it has grown by over 2 billion euro," he said, referring to the trade surplus.

In reply, Wen told the audience of European and Chinese business chiefs that China would continue with its policy of gradual currency reform.

"China will continue to reform the RMB [renminbi or yuan] exchange rate regime in a gradual, proactive and manageable manner," he said, while insisting the Chinese currency was not the only reason for their trade dispute.

"The exchange rate is a cause to some extent, but not the sole decisive factor behind the trade deficit," he said.

Amid the dispute, European representatives said they wanted to avoid protectionist measures.

"We ... need to identify a solution to solve this question, and I hope that it is a cooperative one," EU Ambassador to China Serge Abou said in an opinion piece in the China Daily newspaper yesterday.

"Protectionism is not a winning option. So let us unite our efforts to resist protectionist trends," he said.

The EU, China's largest export market, ran a trade deficit of 128 billion euros (US$175 billion) with China last year -- which is likely to balloon to 170 billion euros this year, EU statistics showed.